April 13, 2008
Why IT Now Sees SaaS As A Savior
I predicted in December that IT would become more comfortable with Software-as-a-Service (SaaS) in 2008, helping to accelerate its growth over the coming months.
Here are some clear indications that my prediction is coming true,
- SaaScon: CIOs from many big name companies, as well as smaller organizations, spoke about their positive experiences with SaaS and traded insights about how to take fuller advantage of SaaS to meet their end-user and IT management needs.
- SaaS for IT: A growing number of major hardware and software vendors are offering SaaS solutions specifically aimed at the IT department. Although many of these offerings could be sold direct by the vendors as managed service solutions, they are being pushed through the vendors’ channel programs.
- Platforms: While the initial platform plays in the SaaS market were aimed at software vendors and developers, the more recent initiatives by Salesforce.com, Bungee Labs and Google have been designed to also appeal to IT professionals and software architects within enterprises as well.
- Compliance: Many of the CIOs at SaaScon and elsewhere have told me about how they are using SaaS to satisfy corporate, as well as government and industry, compliance requirements. Today’s storage and back-up services give many IT organizations the archival and audit capabilities they’ve lacked until now.
You can add standardization to the list. Many of the CIOs who spoke at SaaScon admitted that they like the limitations which SaaS places on customization. They have always known that business unit demands for customized solutions were a major factor in the high costs and failure rate of legacy applications. CIOs are seeing SaaS as a way of reshaping the expectations of business end-users.
The CIOs I’ve talked to recently also recognize the financial benefits of SaaS in today’s recessionary climate. Its subscription pricing model permits companies to shift their software acquisition costs from tightening capital budgets to more flexible operating expenses.
And speaking of the climate, many CIOs are viewing SaaS as a ‘green’ solution because it reduces their computing needs and ‘carbon footprint’.
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There is one other nuance which IT departments should find helpful. With SaaS offerings pricing information easily available, IT departments can benchmark the service they offer against external offerings. IT departments can thus easily prove their value to the business and rationally decide when a service must be purchased from an external entity.
The “standardization” Jeff refers to in this article is very powerful. Like the automobile industry which started with every vehicle being custom and transformed with assembly lines, the IT industry will benefit in many ways.
Ranjit Nayak — April 13, 2008 @ 10:50 pm
I don’t think the entire market will switch to SaaS. However, I think all CIOs WILL explore SaaS each time a new software project emerges in their companies. Now that broadband is widely available and SaaS apps are highly reliable (generally speaking), it’s logical to always check first for a SaaS version, and its potential pros/cons.
Watch for Salesforce.com and Google to work very closely and help define where SaaS is going next.
Joe Panettieri
http://www.mspmentor.net
Joe Panettieri — April 14, 2008 @ 10:21 am
Very much agree to Jeff’s take on standardization and the way it is helping CIOs. Believe that the way individual SaaS applications are helping standardize the business processes along with required built-in flexibility, PaaS/ SaaS Platforms would help in building a standard infrastructure and environment for developing SaaS applications. This way ISVs could more focus on differentiating themselves based on ‘the business logic and user experience’ their application is providing rather than the platform on which it is being provided. Are we hearing IT commoditization here?
Anonymous — April 15, 2008 @ 5:30 am
Jeff – I very much think you are on to something here. I added a few more thoughts in addition to yours, adding the ideas of superior service and operations, budget flexibility, TCO and content and usage aggregation on my blog, SaaS 2.0
Daniel Druker — April 20, 2008 @ 1:22 pm
SaaS customization doesn’t seem quite appealing during early stages of biz and during financial crunches but don’t count em out yet as it is human nature to always go for added-value (even without perceived significant gain) if offered at a price hardly felt. Heck, why do you think open source figures so prominently and platform lock-in is such a big concern? It all ties up with getting value against the threat of SaaS getting stale or another product just offering more becomes available.
Best.
alain
http://www.morpheXchange.com
friarminor — April 28, 2008 @ 5:22 pm
[...] uptime record is still the envy of many IT and business decision-makers. That is why an increasing number of IT organizations are not only supporting the adoption of SaaS and cloud computing, but also benchmarking themselves [...]
THINK IT Services » Blog Archive » Will Salesforce.com’s Outage Derail the SaaS Market? — January 11, 2009 @ 1:19 pm